Wholesale price-based inflation falls 0.58 per cent in July 2020, food prices spike

New Delhi: India's wholesale prices shrank 0.58% in July, for the fourth month in a row, data released by the commerce and industry ministry on Friday showed. The deflation in June was 1.81% while for the month of May and April it was 3.37% and 1.57%, respectively. Inflation in food articles was 4.08% in July as against 2.04 % in June led by a surge in potato prices.

"The considerable narrowing in the WPI disinflation in July relative to the previous month, was along expected lines, with a correction in the index levels for crude oil and mineral oils, further narrowing of the core disinflation and a rise in food inflation to a moderate level," said Aditi Nayar, principal economist at ICRA. However, fuel and power basket inflation fell 9.84% in July, compared to 13.6% in the previous month.

Manufactured products, however, witnessed inflation of 0.51% in July, as against 0.08% in June. 9 sub-components in the manufacturing segment recorded negative growth in July with steepest contraction recorded in case of textiles at 4.8%, basic metals 2.6% and chemicals 2.1%. Official data released Thursday showed retail inflation accelerating for the fourth successive month to 6.93% in July, on the back of a further rise for food prices.

"Overall, we expect the WPI to print in a disinflation of 0.8-1% in FY2021, driven by the correction in prices of various commodities other than gold," Nayar said. CARE Ratings expects wholesale price inflation in the next month to pick-up further and become positive in August largely driven by pick-up in wholesale food prices owing to supply disruptions led by imposition of lockdown measures in certain parts of the country.